Economic recovery cannot be sustained for more than one year
LA PRENSA - Fundación Libertad y Progreso Director, Aldo Abram, anticipated that the incipient recovery observed in the last months of this year could continue "at most one more year", but stressed that the country has no future "unless profound reforms are under way to allow for the recovery of lost confidence in Argentina".
In dialogue with La Prensa, Abram was categorical in emphasizing that the pandemic, although it had a drastic effect on the economy, has served as a pretext to cover up the mistakes made by the Executive Power during the year in office.
"The super stocks, for example, were a very bad measure that later had to be dismantled in a certain way," stressed Abram, who also anticipated that next year the firmness of international prices for Argentine products will play in favor of the Argentine economy. export of the country.
- What assessment do you make of the economy in this very particular year, with the pandemic above?
-Well, the pandemic undoubtedly contributed to making things worse. In any case, what caused the most damage, taking into account that the quarantine was poorly implemented, it seems to me that it is the diagnosis of the country's situation and that is going to cost Argentina an important extra.
- Of what magnitude?
-This is like a person who walks down the street, has a disease that will lead to death, crosses the street and is run over by the quarantine group and sent to intensive care. And the doctor thinks that the only thing to cure is the ailment that caused the attack, and uses medication based on painkillers, this is like the famous 60 measures, such as to calm the pain and therefore the patient feels a little better, what is happening to us now, recovering something in the economy, until at some point what is going to happen is that beyond those palliative care of the patient and despite the treatments, the reality is that the patient is going to end up dying because he had a previous illness that was terminal. That is a bit the situation in which Argentina is, because the Government understands that what it is experiencing now is a recovery process and that recovery is going to be transformed into growth, and the little that the Government has to do to achieve that is closing a debt refinancing agreement with the IMF. Be careful, they also said that with the debt restructuring in the private sector.
-Many experts point out that before the pandemic the economy had already fallen 4.8% in the first quarter and there was an increase in the fiscal deficit and monetary issue?
-In my way of seeing things, I insist that the central point is that the diagnosis is wrong. There are many who say: "Well, here what is needed is that the agreement with the Fund includes fresh funds and that is how it will work." In the first place, Argentina did not experience what happened in other countries, which were doing well, or more or less well, and the pandemic seized them and made it difficult for them. Here we came with a crisis since 2018, and in the first quarter of this year we continued with that crisis, which was unsolved, a credibility crisis, which makes Argentines and foreigners take out their savings, that investments do not come, demanding dollars desperately, and that was before the quarantine and the pandemic. Today it seems that magically it was resolved and nothing to see.
- Then, an additional contribution from the IMF would be innocuous?
-Look, if it were for money, the Cambiemos government would have ended well. At the beginning of his administration, he promised to make structural reforms and never did them and that is why we entered the crisis of 2018. He managed to get out of the stocks less traumatized, solved the problem of holdouts, and with that he had access to a credit card without However, we ended up in crisis. Clearly, the government of Alberto Fernández is not going to have that amount of financing resources that it had at the beginning of his administration Let's change. So, the only way is to solve the underlying problems is to generate credibility, and we are not going to have it with a government that says it will continue to spend much more than it can. It is enough to look at how Argentina's bonds are priced, with a panorama of a country that in three or four years has another serious danger of bankruptcy.
- Do you see another default in the future?
-That's what those who buy our bonds think. They say: "Look what Argentina is doing, trying to attract investment and all it does is increase taxes." We are the 21st country out of 190 nations in terms of tax pressure on private activity, according to the World Bank. In fact, this year we are going to end with more than 170 taxes in the country, including the three levels (national, provincial and municipal). A nonsense, because you just have to go in another direction.
- And what does all this lead to?
-Everything leads to this diagnostic error being maintained in time until its unsustainable, as happened to Cambiemos, and we have a crisis like the one in 2018.
LOOKING TO 2023
- What can happen three years from now when debt maturities begin?
-It must be considered that Argentina's growth and improvement perspective is very low. So, that is where the debt becomes unpayable over time, much more so with the cost of the quarantine. It is low even for those who are optimistic about the recovery, who think that it will be sustained over time. I think that this recovery cannot be sustained beyond a year, if the underlying problems are not resolved. And actually what one can see that the underlying problems, far from being solved, are getting worse.
- What is the most urgent thing to correct?
-Our tax pressure, something that is getting worse. Even with the reduction in spending that will be made next year due to the quarantine effect, public spending is so high that we have to go back to 2010, 2011 or 2012 and it is not that at that time we were very well.
- How do you evaluate the restrictive measures in the exchange market of September 15?
-The super stocks were a terrible measure, which made things worse in a terrible way, and thank goodness that Martín Guzmán realized and began to reverse the measures. That must be recognized by Guzmán.
- Can we, somehow, attract investment?
-There is no experience in the world that significant investments have been made with exchange stocks. The best example of this is that when the previous stocks were implemented starting in 2011, investment fell until it disappeared. Investment fell all the time during the stocks. Any country that you seek and that implemented the stocks had two consequences: a drop in exports and investment. The most recent stocks are those of the last government of Cristina and Venezuela.
- What can be expected from 2021 in terms of inflation, the fiscal situation and economic activity in general?
-The recovery is going to be limited, although the world is smiling at us again, because the international prices of our exports are going to be so high that they are going to offset a certain moderation in terms of the quantities exported. That is something positive for the economy, it is like an injection of wealth and it will allow us to grow more than we could expect. I believe that it is possible to grow quietly around 5.5% that is in the Budget, if these conditions are maintained. In terms of inflation, it accelerated as the level of post-pandemic economic activity recovered and it will continue to accelerate as the economy normalizes. And the Central Bank will continue to issue, with which we will continue with this trend of increasing the monetary base but also with a fall in demand and in turn, the last few months are beginning to see a very strong loss in the value of the peso . With which we still have to see in prices everything that the currency has already depreciated and has not yet moved. That is why inflation estimates for 2021 are at 40% and some place it at least 50%.
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